The Fed & Alan Greenspan.(Correction, Please!)(Correction Notice)

ITEM: Federal Reserve Chairman Alan Greenspan, say Charles Zwick and Peter Lewis in the Miami Herald for February 28, is "conflicted." The writers, the director and assistant director of the Bureau of the Budget in the Johnson administration, continue: "As an enemy of big government, the chairman supports privatization of Social Security. Yet as an enemy of federal budget deficits, he fears the consequences of private accounts. You could say that his position on privatization is philosophical and involves his heart while his position on deficits is pragmatic and involves his mind. His position goes back a long way. Greenspan has been influenced by Ayn Rand and by Milton Friedman, the Nobel Laureate...." "At risk" they continue, "is not only [Greenspan's] reputation for fiscal discipline, but also the hard-earned independence of the Federal Reserve System."

ITEM: The Atlanta Journal-Constitution for February 23 commented: "For a champion of fiscal discipline, Federal Reserve Chairman Alan Greenspan is surprisingly tolerant of what passes for restraint nowadays. Last week, Greenspan endorsed President Bush's plan to make the administration's first-term tax cuts permanent as long as they are accompanied by offsetting spending cuts or other taxes. The problem is, they won't be and Greenspan knows it." Continued the editors: "If he's serious about the need for fiscal discipline, he should retract his support for permanent tax cuts."

CORRECTION: Though Alan Greenspan is promoting privatizing Social Security (and maintaining tax cuts), which would, if implemented correctly, spur much-welcomed private investment in the U.S. and long-term financial health for our country, his reputation as a fiscal hardliner is not warranted. Despite Greenspan's misleading portrayal by the major media, he is not "an enemy of big government," "an enemy of federal deficits," or a "champion of fiscal discipline." If he were, he would have devoted his energies to trying to dismantle the Federal Reserve instead of leading it for many years.

The supposedly "independent" Fed, which was created by an act of Congress, provides an important service to big government: it creates flat money--that is, money backed by nothing--and then loans this money to the government to finance the government's huge deficits. This deficit spending is the handmaiden of big government, since it is much easier for ...